on Sep 25, 2024

Takeaways from the 2024 P3 Electrified Summit in San Diego

Ignacio Montojo shares insights from the 2024 P3 Electrified Summit in San Diego. His insights were originally shared in this LinkedIn Article. 

 

This year’s P3 Electrified Summit brought together private developers, utilities, and government representatives at all levels to explore the current landscape and future prospects of public-private collaboration in energy infrastructure and e-mobility.

 

During a panel discussion, I participated in with Danielle Weizman at San Diego Gas & Electric, Judy Chang from itselectric, and John L. Finley from Uber, we discussed ideas on accelerating the deployment of neighborhood and community electric vehicle charging infrastructure through public-private collaboration. By some estimates, the U.S. will need over 1.2 million public chargers (in addition to 28 million private chargers!) by 2030. With the federal funding flowing through states and cities supporting up to 500,000 new public chargers by that year, the market will have to figure out how to supply another 700,000 through creative and innovative partnerships.

 

Additional takeaways from the conference include:

 

1. We are living in the electricity gauntlet days. The U.S. electric load is growing significantly faster than expected or planned. The warning is stark—the grid is not prepared for such growth. In addition, the U.S. must expand the electricity transmission system by 60% by 2030 to meet projected demand driven by new technology like AI, crypto, and transportation electrification. At the same time, more than 70% of the nation’s grid transmission lines and power transformers are over 25 years old; the stress on this aging grid is increasing, with more frequent blackouts in states across the country, including California and Texas, in response to weather, wildfires, or peak period management. More intermittent renewables on the grid without commensurate battery storage are also adding volatility, and based-load retirements are outpacing the new generation, impacting reliability.
2. Despite unprecedented federal funding, the private sector will have to shoulder the lion’s share of the capital for the energy transition. Combined, the Bipartisan Infrastructure Bill, the CHIPS and Science Act, and the Inflation Reduction Act have pledged over $1.3 trillion in net new infrastructure investments and programs, about half to boost clean energy and decarbonization. In 2023, private global energy transition investments topped $1.7 trillion. However, several studies and participants highlighted that spending on energy and land-use systems in the net-zero transition would cost north of $9 trillion per year through 2050. The International Monetary Fund estimates that the private sector will need to supply about 80% of the necessary investments to develop the world’s energy transition at least through 2030.
3. Private developer procurement for federally funded energy and e-mobility projects has been a learning curve. Several participants used the case study of the $5-billion National Electric Vehicle Infrastructure (NEVI) Formula Program from the Bipartisan Infrastructure Law to illustrate state governments’ challenges in procuring private developers to deploy fast-charging electric vehicle stations along highways. The program, together with $2.5 billion from the Charging and Fueling Infrastructure (CFI) Discretionary Grant Program, is meant to increase the supply of public charging stations nationwide from 78,000 today to 500,000 by 2030. After three years of the rollout of the NEVI program, many states are just now starting to open up NEVI-funded chargers. There are 19 sites in nine states online, with 69 chargers. Ohio has five sites up and running, with 24 chargers, while New York has three sites with 12 chargers. In addition to evolving specifications and guidelines from the federal government and constrained capacity in state agencies, developers alluded to piecemeal and overly complex or burdensome procurement processes and requirements as a significant hurdle.
4. Higher-ed and healthcare institutions continue to drive innovation in public-private partnerships. Just like with the delivery of student housing, several universities and hospitals are pursuing sophisticated public-private partnerships that leverage tax-exempt structures and federal funding. The University of Maryland and its partners described the NextGen Energy Program, a $390 million initiative to transform its campus energy system and achieve a fossil fuel-free operation by 2035 in partnership with Maryland Energy Impact Partners — a consortium including Plenary Americas, Kiewit Development, and Honeywell — that layers in funding from the Inflation Reduction Act. Henry Ford Health System entered into a partnership with Kiewit Development to design, build, finance, operate and maintain their 47,000 square-foot Central Energy Hub at their Detroit South Campus. In addition to developer equity, the project is funded through $249.3 million in tax-exempt green bonds via the Michigan Finance Authority and Provident Resources Group.
5. There is alignment on long-term prospects but not on the immediate next steps. While there was enthusiasm around the tremendous opportunity and mission of the energy transition over the next two decades, many developers expressed that private infrastructure investment in the U.S. has been challenging in the last few years. Unprecedented access to federal funding and the relatively higher cost of private capital have shifted focus from private spending. At the same time, the private sector is facing a paradox of political and community support for climate-friendly energy projects in states with complex regulatory and procurement frameworks and skeptical administrators and communities in less regulated (or self-described “business friendly”) states, on the other hand. This, paired with the uncertainties of an election year, results in some developers and investors taking a “wait and see” approach over the next few months before embarking on major ventures.

 

Throughout the event, the discussions and takeaways manifested the critical point in the energy transition, the pivotal role of the private sector, the importance of balancing careful planning and determination when delivering energy infrastructure, and the value of sound financial, legal, and technical advisors to design effective and efficient public-private partnership procurements and agreements that can save years and billions to governments.

 

The upcoming months, marked by significant national and global political milestones, will start the next cycle of public-private collaboration for the energy transition. As of now, all bets are off. Regardless of what the future holds, continuing to seek consensus on both sides of the aisle and compromises among stakeholders and community will remain the north star to a shared, greener, and prosperous future.